The 34 states that declined to establish health-insurance exchanges are anxiously awaiting the Supreme Court’s decision in King v. Burwell. If the government loses, insurance subsidies that the Affordable Care Act (ACA) makes available to their residents will vanish. An estimated 9.6 million people stand to lose coverage; premiums in the individual market are expected to surge.

The states will find themselves in a difficult spot, both politically and practically. By establishing state-based exchanges, they could restore tax credits to their residents. But the exchanges are controversial in these 34 states, especially among the Republicans who dominate their statehouses and legislatures. Even if the states could muster the political will to create exchanges, time is short. Open enrollment is set to begin in November 2015, a scant four months after the Supreme Court is expected to rule.

Given the stakes and the compressed timeframe, what, if anything, are the states doing to prepare for the possibility of a government defeat in King? Are they drafting plans? If so, what are the leading proposals? How are stakeholder groups responding?

To answer these questions, in research generously supported by the Commonwealth Fund, we did case studies of five states that declined to establish their own exchanges and defaulted to HealthCare.gov: Florida, Michigan, New Hampshire, North Carolina, and Utah. Although no set of states is perfectly representative, these five are diverse in their geography, politics, and level of cooperation on ACA implementation (see Table 1).

From late March through early May, we spoke with between seven and fifteen people from each state, reaching out to gubernatorial advisers, legislators and their staff, agency officials, insurers, hospital associations, and consumer advocates. In exchange for their candor, we do not reveal any identifying information without explicit permission.

In Part 1 below, we outline the overall lessons we learned from our work in these five states, and we present our case study of Florida. In part 2 on Monday, June 8, we will address the situations in Michigan and New Hampshire. Finally, in part 3, on Tuesday, June 9, we will offer case studies of North Carolina and Utah and wrap up with some conclusions.

Three Themes: No Clear Plans, Political Worries, And Time Limitations

Three themes emerged from our case studies. First, none of the five states has a clear plan to deal with post-King fallout. Especially given the volatile politics surrounding the ACA, state officials are generally unwilling to stick their necks out to deal with an eventuality that may never come to pass. Although most states are quietly considering their options, it is difficult for officials to develop plans without knowing how Congress or the Obama administration will respond to a Supreme Court ruling. The administration’s refusal even to discuss contingency planning with state officials has made their jobs all the more difficult.

Second, although most Republican opponents of the ACA say that they hope that the plaintiffs prevail in King, they nonetheless worry that they will be blamed when people lose their coverage. Many of the ACA’s staunchest state-level opponents thus appear open to the possibility of a political compromise. In particular, the governors in the five states are all thought to be more open than their respective legislatures—at least as a relative matter—to the possibility of creating state-based exchanges.

Even so, there is considerable uncertainty in every state about whether the governors could persuade their legislatures to go along with establishing an exchange. Ongoing debates about Medicaid could complicate matters further. Two of the states we studied (Florida and Utah) are in the midst of pitched battles over whether to expand the program; some conservative leaders in the other three hope to use King as leverage in waiver negotiations with the Obama administration.

Third, the timing of the decision leaves insufficient time for the states to set up ACA-compliant exchanges for 2016. In each of the five states, legislative involvement will be essential to establishing a new exchange. Yet only Michigan’s legislature will continue to meet after the ruling. After King, it’s possible that special sessions will be called in the other four; indeed, a special session already appears likely in Utah.

However, to avoid the need to make a rushed decision, many state leaders expressed hope that at least one branch of the federal government will grant them some kind of an extension. When asked how long they would need, most said the bare minimum would be six months, though others said they would need a patch to last all the way through 2016 in order to negotiate the political and practical hurdles to establishing an exchange.

Table 1.

BagleyTable-1

Source: Assistant Secretary for Planning and Evaluation Issue Brief

Florida

Home to 20 percent of the people who could lose their eligibility for tax credits in 2016, Florida arguably has more at stake in King than any other state. Yet Florida has no contingency plan. Opposition to the ACA is so potent that conversations about how to respond to a government defeat in King dwell on the political difficulties; the practical challenges are, at best, a secondary concern.

Opposition to the ACA, and to the exchanges, runs deep in Florida. By early 2011, Governor Rick Scott had determined that Florida would not establish its own exchange: “I don’t think there’s any way the state can do it where it’s good for health care policy.” Scott’s resolve softened for a short time in 2012 after President Obama’s reelection—“If I can get to yes, I want to get to yes”—but Florida has never submitted plans to establish a state-based exchange.

Although the state could rethink that decision if federal dollars were on the line, the acrimonious debate over the Medicaid expansion suggests that Florida may remain steadfast in its opposition. In 2013, Governor Scott announced his support for a three-year expansion. Although the Florida Senate was supportive, the House of Representatives—the more conservative of the two houses—blocked the bill. As then-Speaker Bill Weatherford explained, the House feels “very strongly that we should not accept federal funds. That’s been the position of the House from the very beginning. It’s going to be the position of the House till the very end. There’s been no equivocation on that whatsoever.”

In recent months, the Florida Senate has tried again to move forward with Medicaid. Again, however, the Senate’s efforts have encountered resistance in the House, which adjourned in late April without having reached a compromise on Medicaid or the state budget. (The Florida Supreme Court subsequently held that the House’s early departure violated the state constitution.) Adding fuel to the fire, Scott recently filed a lawsuit accusing HHS of threatening to withdraw some of Florida’s existing federal health-care funding if the state doesn’t move forward with the Medicaid expansion.

Should the government lose in King, similar political dynamics will come into play. Our interviewees were skeptical that the governor would endorse a state-based exchange; they dismissed out of hand the possibility that he might do so without legislative involvement. They were also pessimistic that the Republican-dominated legislature would support an ACA-compliant exchange. Opposition from the House leadership is expected to be especially fierce. Speaker Steve Crisafulli, Speaker pro tempore Matt Hudson, and Representative Richard Corcoran, who will assume the speakership in 2016, all oppose an exchange. As Hudson told us, “I think that Florida has no desire to create a state-based exchange. … You can safely say that as a collective whole we’re not wild about the ACA.”

This is not a fertile political environment to discuss post-King fixes. Although the House and the Senate have agreed to hold a special session in June, the session will conclude by June 20—shortly before the Supreme Court is expected to rule. Our interviewees doubted that the governor would call another special session to deal with fallout from King.

Tentative discussions about King are happening behind closed doors. And while there are no concrete plans in the works, that could change quickly in the wake of a government loss in King. Indeed, one senior Republican Senate staffer believed that creating a state-based exchange would be less controversial than expanding Medicaid. For their part, Democratic legislators appear to have little influence. Democratic Senator Darren Soto, for example, proposed a bill to create a state-based exchange if the Supreme Court rules against the government in King. But the bill has gone nowhere; indeed, even the agency that the bill instructs to administer the new state-based exchange was unaware of it.

Setting the political difficulties to one side, some of our interviewees thought that Florida might have the infrastructure in place to transition smoothly to a state-based exchange. In 2008, the Florida legislature, under the leadership of then-House Speaker Marco Rubio, called for the creation of a health-insurance marketplace called Florida Health Choices. The marketplace went live in 2014, and several of our interviewees suggested that it could transition into an ACA-compliant state-based exchange. Indeed, the Senate has so much confidence in Florida Health Choices that it has put the exchange at the center of its Medicaid-expansion bill.

Rollout of Florida Health Choices has been rocky, however. The exchange had enrolled just 70 people by March 2015. Many observers harbor serious doubts about whether the program could be quickly scaled up.